HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%. This is mainly because system-wide risks in Hong Kong associated with a period of excessive credit growth have not subsided and the housing affordability remains highly stretched.
The specific CCyB requirement applicable to a given authorized institution is expressed as a percentage of its common equity tier 1 capital to its total risk-weighted assets (RWA). CCyB requirement of each authorized institution may vary, depending on the geographic mix of its private-sector credit exposures and the CCyB rate applicable in each jurisdiction where it has such exposures. The latest indicative buffer guide, calculated based on data from the fourth quarter of 2018, signals a lower CCyB of 0.75%, mostly due to the recent narrowing of the property price to rental gap from more than 10% in the previous quarter to slightly below 3%, partly reflecting the correction in the residential property prices after mid-2018. The credit-to-GDP gap, however, remains at a significantly elevated level of over 12%. In addition to the indicative buffer guide, HKMA reviewed a range of reference indicators such as measures of bank, corporate, and household leverage; debt-servicing capacity; profitability and funding conditions in the banking sector; and macroeconomic imbalances.
Keywords: Asia Pacific, Hong Kong, Banking, CCyB, Basel III, Regulatory Capital, HKMA
Previous ArticleEP Resolution on Proposal for Sovereign Bond Backed Securities
MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.
PRA published a public working draft, or PWD, of version 1.2.0 of the BoE Insurance XBRL taxonomy, along with the related technical artefacts.
CPMI published a report that sets out nineteen building blocks for a global roadmap to improve cross-border payments.
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.
EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.
ESMA published the final report on the guidelines on securitization repository data completeness and consistency thresholds.
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.